Farepak ran a scheme in which an estimated 150,000 customers, including thousands from the West Midlands, put money aside for shopping vouchers and Christmas hampers. Some are understood to have saved four-figure sums.

The supermarket giant has now offered to ease the Christmas burden on victims by giving 25 per cent of the amount they had saved.

The Government is to investigate the collapse of the company. Meanwhile, parents affected are appealing to toy stores across the Black Country to help give their children a happy Christmas.

Chancellor Gordon Brown said of Sainsbury’s offer today: “I welcome what Sainsbury’s is doing. It is terrible what has happened to people who have saved through this scheme.”

Anyone affected by the collapse of Farepak can ring a hotline number on 0870 830 6010.